HKSC Developments L.P. v. Infrastructure Ontario and Information and Privacy Commissioner of Ontario
CITATION: HKSC Developments L.P. v. Infrastructure Ontario and Information and Privacy Commissioner of Ontario, 2013 ONSC 6776
DIVISIONAL COURT FILE NO.: 263/12
DATE: 2013-11-28
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C. McKINNON, HIMEL AND WILTON-SIEGEL
BETWEEN:
HKSC DEVELOPMENTS L.P. Applicant
– and –
INFRASTRUCTURE ONTARIO AND INFORMATION AND PRIVACY COMMISSIONER OF ONTARIO Respondents
COUNSEL: Robert Wisner and Adrienne Boudreau, for the Applicant Lawren Murray, for the Respondent Information and Privacy Commissioner of Ontario No one appearing for Infrastructure Ontario
HEARD at Toronto: October 15, 2013
Himel J.:
[1] HKSC Developments L.P. (“HKSC”) applies for judicial review of Order PO-3011 of Assistant Information and Privacy Commissioner Brian Beamish (the “IPC adjudicator”), and of a reconsideration order, Order PO-3072-R, also made by him. The orders required Infrastructure Ontario to disclose information contained in schedules to a project agreement between the Province of Ontario and HKSC. The agreement concerned the redevelopment and operation of 23 service stations along Highways 400 and 401 (the “Project”).
[2] The issue before the IPC adjudicator was whether the records ordered disclosed were exempt from disclosure under the third party information exemption found in section 17 of the Freedom of Information and Protection of Privacy Act, R.S.O. 1990, c. F-31 (the “Act”). This application is in the nature of certiorari, seeking that those parts of the orders that require Infrastructure Ontario to disclose the disputed information be quashed or set aside.
Background
[3] Infrastructure Ontario is the Crown agency responsible for delivering public infrastructure improvements to Ontario. It uses a model called “Alternative Financing and Procurement” in which the public sector determines the purpose and scope of a project while a private sector partner, usually taking the form of a consortium, finances and builds the projects. After a two year procurement process, HKSC was the successful bidder for a project commissioned by the Ministry of Transportation and Infrastructure Ontario to develop, design, construct and partially finance highway service centres on Highways 400 and 401 and to operate and maintain the service centre portfolio under a long term concession agreement. As part of the confidential tender process in the bidding phase of the project, HKSC was required to provide the information to Infrastructure Ontario.
[4] In June 2010, an individual (the “requester”) submitted an access to information request for a copy of the “Alternative Financing and Procurement” contract between the Province of Ontario and HKSC (the “Agreement’). Infrastructure Ontario responded that a copy of the Agreement was published on the Infrastructure Ontario website. The requester appealed to the Commissioner and took the position that a large portion of the Agreement was redacted. Infrastructure Ontario refused to provide the redacted portions of the Agreement on the basis that they fell within the exemptions in sections 17 (third party information) and 18 (valuable government information; economic and other interests) of the Act.
[5] The requester continued with the matter and the parties proceeded to mediation. During mediation, the request was narrowed to focus on the provisions in Schedules 13, 14, 16, 29, 30 and 31 of the Agreement. Both Infrastructure Ontario and HKSC opposed the release of the information in the schedules. During mediation, Infrastructure Ontario advised that it was relying only on portions of section 18. HKSC maintained its position and continued to rely on section 17. The matter proceeded to adjudication before the Commissioner and the parties made written representations.
The First IPC Order (PO-3011)
[6] As noted above, Infrastructure Ontario and HKSC took the position that the information sought was exempt from disclosure under the Act. HKSC sought to rely on the exemption in s. 17(1), paragraphs (a) and (c) (third party information). Infrastructure Ontario sought to rely on the exemptions in s. 18 (valuable government information; economic and other interests).
[7] Section 17 of the Act provides:
17.(1) A head shall refuse to disclose a record that reveals a trade secret or scientific, technical, commercial, financial or labour relations information, supplied in confidence implicitly or explicitly, where the disclosure could reasonably be expected to,
(a) prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of a person, group of persons, or organization;
…[or]
(c ) result in undue loss or gain to any person, group, committee or financial institution or agency;
[8] The IPC adjudicator delivered a 23 page order. He noted at paragraphs 18-19 of IPC Order PO-3011 that “Section 17(1) is designed to protect the confidential ‘informational’ assets’ of businesses or other organizations that provide information to government institutions”. He further commented that, while a central purpose of the Act is “to shed light on the operations of government, section 17(1) serves to limit disclosure of confidential information of third parties that could be exploited by a competitor in the marketplace.” The IPC adjudicator then outlined the three-part test approved by the Ontario Court of Appeal in Ontario (Workers’ Compensation Board) v. Ontario (Assistant Information and Privacy Commissioner) (1998), 1998 7154 (ON CA), 41 O.R. (3d) 464 (C.A.), at para. 22, for determining whether the exemption in s. 17(1) applied:
the record must reveal information that is a trade secret or scientific, technical, commercial, financial or labour relations information;
the information must have been supplied to the institution in confidence, either implicitly or explicitly; and
the prospect of disclosure of the record must give rise to a reasonable expectation that one of the harms specified in paragraph (a), (b), (c) and/or (d) of section 17(1) will occur.
[9] The adjudicator noted that HKSC must satisfy each part of the test and that the onus is on the affected party to prove that the exemption in s. 17(1) applies to the records at issue. He then went on to describe, at para. 29, two exceptions that may apply even if the affected party does not make out the second part of the test – the requirement that the information be supplied in confidence:
There are two exceptions to this general rule which are described as the “inferred disclosure” and “immutability” exceptions. The “inferred disclosure” exception applies where disclosure of the information in a contract would permit accurate inferences to be made with respect to underlying non-negotiated confidential information supplied by the affected party to the institution. The “immutability” exception applies to information that is immutable or is not susceptible of change, such as the operating philosophy of a business, or a sample of its products. In addition, the onus is on the party resisting disclosure to show immutability.
[10] The relevant schedules of the Agreement were described by Infrastructure Ontario as follows:
Schedule 13: sets out the capital and concessionary and rent payments between the affected party and the Province pertaining to the Project;
Schedule 14: sets out the pricing of various products serviced at the highway service centre locations;
Section 16: sets out any compensation payments to the parties based on certain termination events that may occur;
Schedule 29: sets out the various payments to be made between the parties with respect to the Project;
Schedule 30: is the closing financial model submitted by the affected party during the bid process and which Infrastructure Ontario’s evaluation of pricing during the procurement process is based on; and
Schedule 31: sets out the payment details regarding any refinancing that may occur with respect to the Project.
[11] The IPC adjudicator concluded the following:
(1) That all of the information met the first part of the test under s. 17(1) as the schedules to the Agreement contained “commercial and financial information”;
(2) That some information in the schedules was “supplied” by HKSC, as it disclosed “fixed, underlying costs, agreements struck between the affected party and other third parties and/or were not negotiated….” For this information HKSC (the supplier) had a reasonable expectation of confidentiality, implicit or explicit at the time the information was provided. There was a reasonable basis for the expectation of confidentiality given the sensitive financial nature of the information. On the issue of harm, he noted that the affected party must provide “detailed and convincing” evidence to establish a “reasonable expectation of harm”. The adjudicator was satisfied that disclosure of the information supplied in confidence could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of the affected party, resulting in undue loss to the affected party and gain to other competitors;
(3) However, he found that the remainder of the information in the schedules was not “supplied” by HKSC and did not fall under the exemption. Rather, it was mutually generated information created through the process of negotiation and that “[the schedules] constitute the agreed, negotiated terms of the agreement”.
[12] In summary, the IPC orders upheld Infrastructure Ontario’s decision to withhold certain portions of the Agreement pursuant to the third party exemption in s. 17(1) of the Act but the remainder of the Agreement was ordered to be disclosed. The materials held to have been “supplied” by HSKC and therefore eligible for the exemption under s. 17(1) were:
Schedule 13: HKSC’s rate of return as a percentage (s. 1.1(d));
Schedule 29: The amount of the construction loan between HKSC and non-parties to the contract (s. 1.5), HKSC’s cost of financing (s. 1.7), and HKSC’s initial equity investment in the Project (sections 1.16 and 3.7(5));
Schedule 30: HKSC’s closing financial model for the project; and
Schedule 31: HKSC’s threshold equity internal rate of return (s. 1.1(i)) and HSKC’s lending arrangements with third parties (Appendix A).
[13] The Commissioner ordered the balance of the information disclosed.
The Second IPC Order (PO 3072-R)
[14] HKSC requested the IPC adjudicator reconsider his decision concerning certain information ordered to be disclosed on the basis that: (1) he fettered his discretion by applying past Information and Privacy Commission (“IPC”) precedents without regard to the specific circumstances of the case; and (2) he failed to state reasons for dismissing HKSC’s submission that the information not directly supplied to Infrastructure Ontario was still exempt by way of the “inferred disclosure” exception. Section 18 of the IPC’s Code of Procedure sets out the grounds for reconsideration.
[15] After the parties were given an opportunity to make representations, the IPC released a second order dated April 20, 2012. The adjudicator determined that his consideration of past IPC decisions on the matter of whether information was “supplied” did not constitute a fettering of his discretion. He did not consider himself bound by these decisions and applied the reasoning in the decisions to the circumstances of the case. On the submission that he failed to state reasons for dismissing the affected party’s submission that the “inferred disclosure” exception applies to the records at issue, he, however, agreed that he failed to fully consider the inferred disclosure exception to the second part of the section 17(1) test and that this constitutes a fundamental defect in the adjudication process mentioned in section 18.01(a) of the IPC’s Code of Procedure. He therefore revisited the issue.
[16] The adjudicator then reapplied the second part of the three part test which looks to whether the records were “supplied in confidence” and whether the “inferred disclosure” or “immutability” exceptions apply. The IPC adjudicator reversed the previous order in respect of certain information, finding that this information was “supplied” under the s. 17(1) test and that there is a reasonable basis for the expectation of confidentiality. He held that disclosure of the information in those records could reasonably be expected to prejudice significantly the competitive position or interfere significantly with the contractual or other negotiations of the affected party resulting in undue loss to the affected party and gain to other competitors. Therefore, he ordered these records exempt from disclosure pursuant to s. 17(1).
[17] Following this analysis, the Commissioner reviewed again the remaining portions of the schedules that he had ordered disclosed in the previous order. He found that the redacted information contained in Schedule 13 section 1.1(d) and Schedule 31 section 1.1(i) can be considered to have been “supplied” under the section 17(1) test. However, he also concluded that the information in these provisions would permit an accurate inference to be drawn regarding the HSKC’s rate of return and threshold equity rate of return, respectively, for the Project. Accordingly, he concluded that disclosure of such information would permit accurate inferences to be drawn regarding underlying non negotiated confidential information supplied by HSKC.
[18] The adjudicator then reviewed the remaining schedules that he ordered disclosed in his first order. He held that these schedules were not “supplied” as per s. 17(1) of the Act because they were the end product of a negotiation process and set out mutually agreed upon terms that the parties chose to incorporate into the Agreement. He was not satisfied that the proposed disclosures would allow inferences to be drawn about various components of HKSC’s business model. The reversal of the decision was therefore limited to the information contained in Schedule 13 section 1.1(d) and Schedule 31 section 1.1(i). The previous decision concerning all other information at issue was upheld and Infrastructure Ontario was ordered to disclose the information within set timelines.
[19] Accordingly, the records in Schedule 13, except section 1.1(d), Schedule 14, Schedule 16, Schedule 29, except sections 1.5, 1.7, 1.16 and 3.7(5) and Schedule 31, except Appendix A and section 1.1(i) were ordered disclosed. HKSC’s application focuses only on the remaining information that the IPC ordered disclosed as it was not covered by the s. 17(1) exemption.
Positions of the Parties on this Application
[20] The parties agree that the appropriate standard of review is reasonableness. The IPC adjudicator interpreted the Act, the Commission’s home statute. The interpretive exercise did not engage any of the categories of questions that mandate a correctness review: see Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, 2011 SCC 61, [2011] 3 S.C.R. 654 at para. 30.
[21] However, HKSC submits that: (1) the decisions deserve limited deference given the absence of a privative clause: see Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R.190 at para. 160; (2) materials submitted to the IPC which were not subject to examination or cross-examination under oath are entitled to less deference: see Ontario (Workers’ Compensation Board), at para. 18; and (3) the IPC’s task of interpreting and applying the s. 17(1) exemption is simple statutory interpretation which does not require the decision maker to engage in policy making, suggesting that decisions of the IPC were not intended to be final. As such, they attract less deference from a reviewing court.
[22] The IPC responds that HKSC’s argument for limited deference within the reasonableness standard is based on a decision from the Ontario Court of Appeal that was rendered 15 years ago and conflicts with more recent jurisprudence such as Dunsmuir and Mills v. Ontario (Workplace Safety and Insurance Appeals Tribunal), 2008 ONCA 436, 237 O.A.C. 71, at para. 18.
[23] HKSC argues that the IPC adjudicator’s decision that the disputed information was not “supplied” by HKSC was unreasonable. It argues that the reasoning was internally inconsistent, that the adjudicator fettered his discretion by following IPC precedents without regard to the specific and unique circumstances of the case, and that the disputed information cannot have been negotiated with Infrastructure Ontario as it was a bid in response to a Request for Proposal and must have been “directly supplied” by HKSC. Further, HKSC takes the position that the decision does not explain with reasons why the IPC adjudicator concluded that the Schedules are the product of the negotiation process and not supplied. To order the disclosure of the schedules would, it argues, result in disclosure of their business formula, the rate of return on the project, and their proprietary business strategy.
[24] The IPC submits that the adjudicator’s decision was reasonable, that the adjudicator did not feel bound to follow previous IPC cases and, that there is nothing wrong with considering past decisions and applying them to the circumstances of the case. It further argues that negotiations took place between the date of the bid and the award of the contract. The IPC takes the position that when a freedom of information request is made for a copy of a contract, the Commissioner will assume that the agreement is the result of negotiations unless there is evidence that it was not. This presumption is in keeping with the legislation which provides that information should be made available to the public. As there was no reviewable error, the application should be dismissed.
[25] Infrastructure Ontario had supported the applicant before the Assistant Commissioner but did not appear at the hearing of this judicial review application and filed no materials.
Standard of Review
[26] The standard of review of the Commissioner’s interpretation and application of the Act has been held to be reasonableness: see Ontario (Workers’ Compensation Board), at paras. 16-18 (C.A.); Canadian Medical Protective Association v. Loukidelis (2008), 2008 45005 (ON SCDC), 298 D.L.R. (4th) 134 (Ont. S.C. - Div. Ct.), at para. 39. The reasonableness standard was outlined in Dunsmuir at para. 47:
A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.
[27] In Mills, at para. 18, the Ontario Court of Appeal held:
I understand the majority in Dunsmuir to be referring now to only two degrees of deference, correctness, where no deference is accorded, and reasonableness, where deference is accorded. It is not necessary or appropriate to then assess the degree of deference within the reasonableness standard.
[28] The decision maker is entitled to deference in findings of fact and weighing of evidence. It is for the party seeking review to show positively that the decision is unreasonable: see Law Society of New Brunswick v. Ryan, 2003 SCC 20, [2003] 1 S.C.R. 247, at para. 48.
Decision
[29] This application for judicial review concerns the interpretation of the third party exemption in section 17 of the Act. In order for the exemption to apply, the applicant has the onus of providing evidence to satisfy each part of the three part test set out above. The adjudicator considered the test and made the order and the reconsideration order which held that some portions of the contract between HKSC and Infrastructure Ontario were exempt from disclosure under the s. 17 exemption. In total, the information at issue included fixed underlying costs of HKSC and agreements between HKSC and third parties. The information ordered disclosed included information which the IPC concluded was generated through the negotiation process and cannot be said to have been “supplied” by HKSC under s. 17 of the Act.
[30] HKSC argues that orders PO-3011 and PO-3072-R should be quashed on the basis that the Commissioner’s decision that certain information did not satisfy the exemption under s. 17 was unreasonable. The IPC submits that the Commissioner’s decision is in all respects reasonable and discloses no reviewable error.
[31] It should be noted that HSKC knew from the outset that the Act applied to these transactions with government and that the Province must comply with its provisions. The standard of review of the interpretation and application by the Commissioner of the meaning of the word “supplied” in s. 17 is reasonableness. In our view, the IPC’s decision that the third party exemption does not apply to the information ordered disclosed was done after a careful analysis of s. 17(1) and the three part test endorsed by the Court of Appeal in Ontario (Worker’s Compensation Board). The Commissioner’s approach in this case was consistent with the approach taken in other cases interpreting s. 17(1) and approved of in Boeing Co. v. Ontario (2005), 200 O.A.C. 134, 2005 24249 (Ont. S.C. - Div. Ct.) at paras. 18-20. Those cases have found that information in a contract is typically the product of a negotiation process between the parties. The content of a negotiated contract involving a government institution and another party will not normally qualify as having been “supplied”: Boeing, at para. 18; Kitchener (City) v. Ontario (Information and Privacy Commissioner), 2012 ONSC 3496 (Div. Ct.), at para. 10.
[32] In this case, HKSC concedes that it negotiated the final terms of the Agreement with Infrastructure Ontario over a period of seven months after it was awarded the contract in a tender process in August 2009. Moreover, while it describes the Agreement as unique and distinguishable from the other circumstances in which courts have found that the content of a negotiated contract is not supplied, it was unable to point to more than the complexity and length of the Agreement. This is a quantitative but not a qualitative distinction. It does not support HKSC’s contention that the principle applied in Boeing is inapplicable in the present circumstances.
[33] The IPC adjudicator’s conclusion that a detailed agreement like the one in this case was the result of negotiations was a reasonable one. HKSC bears the onus in this case of discharging the presumption that information forming part of a contractual agreement constitutes part of its negotiated terms even where it originated with a third party. The applicant has not met that onus. The IPC adjudicator reasonably concluded that the agreement was the result of negotiations and that the records do not reveal information of the applicant actually supplied to the Ministry. He applied the appropriate test consistent with past decisions to the records before him. In no way did he fetter his discretion by considering those earlier decisions of the IPC.
[34] The IPC adjudicator’s conclusion that the HKSC has failed to provide a sufficient explanation as to how the information required to be disclosed would permit inferences to be drawn regarding various components of its business model is also reasonable. The IPC adjudicator described HKSC’s representations as “unsupported assertions’’ and “sweeping generalities”. On this hearing, counsel for HKSC has been unable to demonstrate how the chart provided by HKSC regarding the disputed information would actually permit inferences to be drawn regarding important elements of its closing financial model, as set out in Schedule 30. We note that the disputed information in Schedules 16 (compensation on termination) and 31 (refinancing) does not appear to be be included in the financial model. Counsel advised that the most sensitive information was contained in Schedule 14. However, HKSC cannot demonstrate how knowledge of the detail in this Schedule will permit inferences of revenues and profits without the addition of considerably more information in the financial model that is not being disclosed. It is not correct to suggest that such information reveals HKSC’s pricing strategy, even if it discloses certain caps on its pricing. Similarly, we do not see how any such inferences can be drawn from the penalty provisions in Schedule 16.
[35] The reasons satisfy the requirements of “justification, transparency and intelligibility within the decision-making process” of the IPC adjudicator. While the reasons in the order and reconsideration order may not be perfect, so long as they adequately explain the bases of the decision, they are sufficient to permit review: see Newfoundland and Labrador Nurses Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708, at para. 18 citing Canada Post Corp. v. Public Service Alliance of Canada, 2010 FCA 56, [2011] 2 F.C.R. 221, upheld 2011 SCC 57, [2011] 3 S.C.R. 572. In particular, the applicant has failed to demonstrate how the Commissioner’s decision is internally inconsistent. The protected information disclosed comprises HKSC’s business model and fixed underlying costs with third parties, and related agreements, and the initial equity investment. This information is qualitatively different from the information ordered to be disclosed, which includes numerous operational details with Infrastructure Ontario including the split of proceeds of any future sale or refinancing. The decision is also consistent with the policy of the Act. The decision on the third party exemption is not outside a range of possible acceptable outcomes defensible in respect of the facts and the law.
[36] Accordingly, the IPC adjudicator’s conclusion that the information ordered disclosed did not qualify for the exemption under s. 17(1) for the reasons outlined by him was reasonable. Therefore, the application for judicial review is dismissed. The documents previously sealed and those in the compendium filed which were ordered by the IPC adjudicator not to be disclosed shall remain sealed. The balance of the documents ordered disclosed shall not be sealed unless there is a further order of the court.
[37] As the parties agree that neither party will seek costs, there shall be no order as to costs.
C. McKINNON J.
HIMEL J.
WILTON-SIEGEL J.
Released: November 28, 2013
CITATION: HKSC Developments L.P. v. Infrastructure Ontario and Information and Privacy Commissioner of Ontario, 2013 ONSC 6776
DIVISIONAL COURT FILE NO.: 263/12
DATE: 2013-11-28
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
C. McKINNON, HIMEL AND WILTON-SIEGEL
BETWEEN:
HKSC DEVELOPMENTS L.P. Applicant
– and –
INFRASTRUCTURE ONTARIIO AND INFORMATION AND PRIVACY COMMISSIONER OF ONTARIO Respondents
REASONS FOR JUDGMENT
Himel J.
Released: November 28, 2013